The New Ecommerce Dilemma: Buy, Build, or Leverage?


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Buy vs. build is the perennial question facing IT leaders seeking to enable their organization's ecommerce ambitions. Learn what critical questions IT leaders need to consider before they select the right ecommerce strategy for their enterprise.

Featuring: Michael Vax, Chief Technology Officer, Elastic Path Software

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  • Small number of pioneers saw great potential in WWW as a selling channel and started to build ecommerce applications for their internal useServices companies started to develop ecommerce for their clients as part of website developmentSome of those companies started to productize their solution and became ecommerce software vendors
  • At first choices were limited to Build vs. Buy decisionWith introduction of SaaS solutions became more complicated
  • At first choices were limited to Build vs. Buy decisionWith introduction of SaaS offerings choice became more complicatedVendors like Amazon or Demandware … offer a complete set of eCommerce services in a hosted solutionOther vendors specialize in a particular aspect of eCommerce – web analytics, improved search, customer reviews, price comparison SaaS examplesEmail marketingPayment GatewaysShipping servicesWeb2 Community ServicesFraud detection Rich media (streaming)SaaS solutions are priced on a subscription basis, often based on the number of users or transactions
  • Regardless of the model selected your solution will always be somewhere away from the corner and will have some of the components from Build, Buy, Leverage
  • ProsFast to marketLower upfront costEasy to scale with demandContinuous enhancements via ongoing updates and upgradesNo additional hardware and lower internal staffing requirements No worries about upgradesConsPenalized for success Cannot move Cannot innovate on your own paceDifficult to integrate with internal systems Security concernsFull dependence on SaaS vendor There may be some compliances issues that will prevent you from using SaaS
  • Buy model will still require you to do some custom development and integrate with internal and external systemsProsFeature rich packagesContinuous investment by vendor into new features and enhancementsTime to market slower than SaaS but significantly quicker than buildSome prebuilt integrations may be in placeVendor support with operational issuesThere are SI and developers with previous experienceRobust and well tested and used systemConsExpensiveYou may get more features that you actually needMonolithic solutions that may be difficult to adopt Complex application to learn and manageLocked with vendor solution, difficult to switched if not satisfiedPace and freedom to innovate are limitedMay not fit your unique requirements
  • You should only consider this option if your online store has very unique requirementsWith build model you are more likely to leverage more of internal systemsProsBuild exactly to your needsCan take the full advantage of internal systemsBe unique in market place, competitive advantageFully leverage your previous investment in ERP and other internal systemsMore abilities with existing brick & mortal experienceConsVery ExpensiveLong time to market. Usually takes longer than initially thoughtRiskyInternal IT may not have all required skills and expertiseYour IT organization will need to support future maintenance and enhancementsChallenging to keep with market and technology innovations. Very easy to end up behind feature wise
  • When using eCommerce framework you can easily select what modules you want to use and take full advantage of existing Enterprise systems.You your existing CMS to manage both your web site and online store UIIf you have a call center that handle your offline customers integrate it tightly with customer management interfaces of the frameworkProsJump start your implementation by taking advantage from rich set of out the box eCommerce featuresPick and choose exactly what you need and extend / change to fit your needsRely on vendor to invest in building up framework by adding additional functionality that you may need laterFull control of eCommerce initiativesFreedom to integrate and take a full advantage of leveraging existing enterprise systemsAccess to source codeRobust and well tested and used systemConsLonger to implement than SaaS solutionRequires knowledgeable IT staff or SIInitial cost is higher than SaaS
  • It is an operational model for Buy or FrameworkProsA middle ground between SaaS and custom build solutionYou have an option to move solution in house at later dateMore freedom to innovateLess load on internal IT organizationDoes not require internal IT skillsNo operational risk or overheadYou can do a combo between build & buyEasy to scale with demandConsStill limited controlNot as easy to integrate with internal systems as with in house hosted solutionSecurity risks
  • Consider how your eCommerce needs are most likely to change over time
  • Look outside of your enterprise. Analyze your company's ecosystem.
  • For companies that build competitive advantage not by unique eCommerce features but by focusing on owing unique brand, merchandising, and marketing.CUSTOMER EXAMPLE: PowerReviews’ customer evoCustomer:Carry snowboard, ski, skateboard and wakeboard gear and clothes. Leveraged PowerReviews’ AnswerBox solution to supplement its existing content and successfully answer a wide array of customer questions that hadn’t been adequately addressed by their standard descriptions. Solution:They selected a SaaS model because: it got them light years ahead of where they were (urgency high) all the heavy lifting was with the SaaS vendor (IT skills low)PowerReviews provided guidance for best practices (expertise low)
  • CUSTOMER EXAMPLE: COMARK (BUT DON’T MENTION THE NAME!!!)CompanyThis apparel retailer had multiple brands and had never sold anything online. Ecommerce was another way to serve customers and capture any lost revenue from out of stock items in bricks-and-mortar stores.Solution:Buy model worked for them because there was low complexity and uniqueness -- just playing catch up with the rest of the competitors
  • CUSTOMER EXAMPLE: LUXOFT CUSTOMER HOTWIRECompanyThe client was a travel agent with 20,000 users daily. They needed a web interface for their clients to search, book trips easily while advertising trips based on particular trip requirements. They needed back-end systems to manage deals and other business-related data. They also needed an interface for suppliers’ to fill in their offers. SolutionCustom build solution using J2EE, Oracle 10g, and Solaris technologies. The build solution allowed them to fulfill many complex and unique requirements:“Build” approach was chosen because:Subject of sale is compound (e.g. package consist of multiple components like hotel reservation, airline tickets, car rentals) and these components need to match each other by multiple factors (time, price, destination etc) System has many external dependencies (registration systems like ITA, SABRE, PEGASUS) which change and require performance tuning – often means deep refactoringMultiple different pricing systems that reflect individual agreements with hotels, airlines etc Specific Cache of requests – the system is caching individual items (e.g. registration in certain hotel) and operates with cached or original items depending on business flows
  • CUSTOMER EXAMPLE: EP CUSTOMER AEROPLANCompanyOne of the most successful airline loyalty rewards program in the world, Aeroplan wanted to expand their loyalty program and promote non-air rewards. SolutionSelected ecommerce framework because they had complex and unique requirements:- Dealing with redeeming Aeroplan mile points (as opposed to dollars) for non-air rewards- For the non-air rewards they had to amalgamate hundreds of partner products into a single catalog- French and English
  • CUSTOMER EXAMPLE: VANOCCustomer:Elastic Path won exclusive rights to the Vancouver 2010 Olympic and Paralympics Winter Games online retail program. We are running the Vancouver 2010 online store under a hosted managed model: Created the online store with the Elastic Path framework Did front end work (design) Purchasing Merchandising Marketing Customer ServiceSolution:VANOC used a hosted managed model because they didn’t have the IT skills or the ecommerce expertise to run their own store.
  • Regardless of the model selected your solution will always be somewhere away from the corner and will have some of the components from Build, Buy, Leverage
  • Deliver successful enterprise ecommerce projects A successful ecommerce project is a beautiful thing.  It can raise revenue, reduce cost, and strengthen a brand.  Unfortunately, the visibility of ecommerce and the breadth of stakeholders can amplify the usual project risks—availability of IT skills, understanding of business needs, scope control, accurate estimating, and so on. So whether you are replacing your platform or just adding a new recommendations engine, how do you make sure your ecommerce project succeeds? We sifted through the results (and in some cases, debris) of ecommerce projects over the last 10 years to bring you this “on the ground” view of what to do to turn the odds in your favor. In this one hour webinar, Elastic Path COO, Gordon Janzen, and (HCL name/title) will help you answer the critical questions for delivering a successful ecommerce project: How are ecommerce projects different from other IT and marketing projects? What business and project management elements are especially important in ecommerce projects?What technical elements predispose an ecommerce project for success?What are the Top 10 things to do before project kickoff?
  • The New Ecommerce Dilemma: Buy, Build, or Leverage?

    1. 1. The New Ecommerce Dilemma: Buy, Build, or Leverage?<br />Presented by Michael Vax, CTO, Elastic Path<br />You may listen to audio using your computer’s microphone and speakers (VoIP) or dial in below:<br />United Kingdom: +44 (0) 161 660 8220 <br />United States: +1 516 453 0014 <br />Access Code: 664-571-172<br />
    2. 2. Introducing Elastic Path Software<br />Provides a flexible, feature-rich framework<br />For enterprises that have unique business requirements and a complex IT environment<br />Over 200+ clients rely on Elastic Path<br />#1 ecommerce blog<br />
    3. 3. Bill Mirabito: First, choose the model<br />Copyright ©2009. B2C Partners. All Rights Reserved.<br />Selecting the Right eCommerce Software in Six Weeks or Less<br />(<br />
    4. 4. What we will cover today<br />Understanding what models are available<br />Understanding your ecommerce needs<br />Finding the right model for your enterprise<br />
    5. 5. Understanding what models are available<br />
    6. 6. Every new market starts from “Build”<br />A small number of pioneers started to build ecommerce applications for their internal use<br />Web services companies started to develop ecommerce for their clients<br />Some started to productize their solution<br />
    7. 7. Complex choices<br />SaaS<br />Buy<br />Build<br />
    8. 8. SaaS solutions<br />A/B Testing<br />Web<br />Analytics<br />Tax <br />Calculation<br />Customer <br />Reviews<br />Payment<br />Gateways<br />Site Search<br />Complete<br />Ecommerce<br />Offering<br />Campaign<br />Management<br />Email<br />Marketing<br />Personalization<br />See more choices at<br />“Software-as-a-Service (SaaS) is a software deployment and subscription pricing model in which an enterprise application is delivered and managed as a service by software vendor to meet the needs of multiple customers simultaneously”<br />- THINKStrategies, Inc.<br />
    9. 9. Leveraging existing enterprise systems<br />Order<br />Management<br />Catalog<br />Management<br />Pricing<br />CRM<br />SaaS<br />Internal<br />Systems<br />CMS<br />Buy<br />Build<br />
    10. 10. Build, buy, or leverage?<br />Internal<br />Systems<br />SaaS<br />Buy<br />Build<br />
    11. 11. SaaS<br />SaaS<br />Web<br />Analytics<br />CRS<br />Customer<br />Reviews<br />Order<br />Management<br />
    12. 12. Buy<br />Order<br />Management<br />Pricing<br />CRS<br />Customer<br />Reviews<br />Buy<br />A/B Testing<br />Web<br />Analytics<br />Build<br />
    13. 13. Build<br />Web<br />Analytics<br />Pricing<br />CMS<br />Customer<br />Reviews<br />CRS<br />Build<br />Catalog<br />Management<br />Tax<br />Calculation<br />Order<br />Management<br />A/B Testing<br />Buy<br />
    14. 14. What is an ecommerce framework?<br />System providing feature rich ecommerce functionality that can be extended by your internal IT team, system integrators, or vendor.<br />Custom Ecommerce Features<br />Framework<br />Ecommerce Framework<br />Source Code<br />APIs<br />Reusable Services<br />Out-of-the-box features<br />Dev Env<br />
    15. 15. Ecommerce Framework<br />Tax<br />Calculation<br />Payment<br />Gateways<br />Web<br />Analytics<br />Customer<br />Reviews<br />Build<br />Ecommerce Framework<br />Order<br />Management<br />CRS<br />Price<br />Management<br />CMS<br />
    16. 16. What is a hosted managed model?<br />Your ecommerce services are hosted and managed by a vendor but with the option to take it in-house at any point.<br />
    17. 17. Hosted managed model<br />Customer<br />Reviews<br />Web<br />Analytics<br />Hosted Managed<br />Order<br />Management<br />Build<br />CRS<br />
    18. 18. Understanding your ecommerce needs<br />
    19. 19. Assessing your requirements and resources<br />
    20. 20. Complexity<br />Is there a single or multiple ecommerce initiatives?<br />What does your organization sell? <br />Single catalog or many different types <br />of products and services?<br />How will you deliver the<br /> ecommerce experience? <br />What type of ecommerce?<br />B2C , B2B , Both<br />
    21. 21. Complexity<br />Evaluate your ecommerce ecosystem. Do you plan to provide ecommerce services to your vendors, partners, customers, or resellers?<br />How different are those offerings from your own?<br />
    22. 22. Uniqueness<br />Do you have a unique business model, selling channel, or product?<br />Are you creating an innovation to stay ahead of your competitors?<br />
    23. 23. Integration<br />Internal<br />ERP (Orders, pricing, catalog) <br />Content management systems<br />Customer relationship management<br />External<br />Analytics<br />Tax calculation<br />Product reviews<br />
    24. 24. Urgency<br />Do you have a current solution?<br />How much time to you have to develop a new solution?<br />Will this ecommerce solution be rolled out to one or more business units all at once or one at a time?<br />
    25. 25. Strategic importance<br />How strategic is ecommerce to your success?<br />Is time to market critical to your success?<br />How fast will your ecommerce needs evolve?<br />Are you taking a global or local approach?<br />
    26. 26. IT budget<br />Do you have enough budget (i.e., capital and recurring expenses)?<br />Will this cost be shared amongst different departments?<br />
    27. 27. IT skills<br />Do you have an experienced IT team that can drive ecommerce initiatives?<br />What are your IT policies on in-house development?<br />Do you have trusted SI or partners that you can rely on?<br />
    28. 28. Your ecommerce expertise<br />Have you managed online stores before?<br />What is your organization’s experience in online marketing, site optimization, customer support?<br />Will you need to coordinate online and offline channels?<br />Are you aware of ecommerce regulations<br />Do you have experience using Web 2.0 social networking?<br />
    29. 29. Finding the right model for your enterprise<br />
    30. 30. When to use a hosting solution (SaaS)<br />COMPLEXITY<br />SaaS<br />UNIQUENESS<br />INTEGRATION<br />URGENCY<br />STRATEGIC<br />IT BUDGET<br />IT SKILLS<br />ECOM EXPERTISE<br />
    31. 31. When to Buy<br />COMPLEXITY<br />Buy<br />UNIQUENESS<br />INTEGRATION<br />URGENCY<br />STRATEGIC<br />IT BUDGET<br />IT SKILLS<br />ECOM EXPERTISE<br />
    32. 32. When to Build<br />COMPLEXITY<br />Build<br />UNIQUENESS<br />INTEGRATION<br />URGENCY<br />STRATEGIC<br />IT BUDGET<br />IT SKILLS<br />ECOM EXPERTISE<br />
    33. 33. When to use an ecommerce framework<br />COMPLEXITY<br />Ecommerce Framework<br />UNIQUENESS<br />INTEGRATION<br />URGENCY<br />STRATEGIC<br />IT BUDGET<br />IT SKILLS<br />ECOM EXPERTISE<br />
    34. 34. When to use a hosted managed solution<br />COMPLEXITY<br />Hosted Managed<br />UNIQUENESS<br />INTEGRATION<br />URGENCY<br />STRATEGIC<br />IT BUDGET<br />IT SKILLS<br />ECOM EXPERTISE<br />
    35. 35. Build, buy, or leverage – Find your model<br />Internal<br />Systems<br />SaaS<br />Your Enterprise<br />Ecommerce Solution<br />Hosted Managed<br />Ecommerce Framework<br />Build<br />Buy<br />
    36. 36. Next month’s webinar<br />Deliver successful enterprise ecommerce projects<br />Presented by Elastic Path and HCL<br />Date: Thursday, April 30<br />Time: 9am Pacific/ 12pm Eastern<br />Register at<br />